[Federal Register Volume 88, Number 243 (Wednesday, December 20, 2023)]
[Notices]
[Pages 88186-88191]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27917]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99175; File No. SR-PEARL-2023-69]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX 
Pearl Equities Fee Schedule

December 14, 2023.
    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on December 12, 2023, MIAX PEARL, LLC (``MIAX 
Pearl'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') a proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the fee schedule (the 
``Fee Schedule'') applicable to MIAX Pearl Equities, an equities 
trading facility of the Exchange.
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-options/pearl-options/rule-filings, at MIAX Pearl's principal office, and at the Commission's 
Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed

[[Page 88187]]

any comments it received on the proposed rule change. The text of these 
statements may be examined at the places specified in Item IV below. 
The Exchange has prepared summaries, set forth in sections A, B, and C 
below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to: (1) amend 
Section 1)d) to modify the volume requirement in Tier 1 of the Remove 
Volume Tiers \3\ applicable to executions of orders in securities 
priced at or above $1.00 per share that remove liquidity from the 
Exchange (``Removed Volume'') and eliminate Remove Volume Tier 2 and 
the corresponding fee; and (2) amend Section 1)f) to modify the 
expiration month (referred to herein as the ``sunset period'') for the 
Step-Up Added Liquidity Rebate. The Exchange originally filed this 
proposal on November 30, 2023 (SR-PEARL-2023-67). On December 12, 2023, 
the Exchange withdrew SR-PEARL-2023-67 and refiled this proposal with 
minor changes.
---------------------------------------------------------------------------

    \3\ See Fee Schedule, Section 1)d).
---------------------------------------------------------------------------

Remove Volume Tiers Table Changes
    Currently the Exchange charges a fee of $0.00295 per share for 
executions of Removed Volume on the Exchange in securities priced at or 
above $1.00 per share, except for executions of Removed Volume that 
execute at the midpoint for non-displayed Midpoint Peg Orders \4\ in 
all Tapes.\5\ The Exchange also offers a tiered pricing structure in 
Section 1)d) of the Fee Schedule, Remove Volume Tiers, which provides 
reduced fees for executions of Removed Volume on the Exchange in 
securities priced at or above $1.00 per share based on certain volume 
thresholds achieved by Equity Members.\6\ To achieve the reduced fees 
of the Remove Volume Tiers, Equity Members must, (i) for Tier 1, 
achieve an average daily volume (``ADV'') \7\ that is equal to or 
greater than 0.10% of the total consolidated volume (``TCV'') \8\ and 
execute at least 1,000 shares of added liquidity during the month; and 
(ii) for Tier 2, achieve an ADV that is equal to or greater than 0.15% 
of TCV and execute at least 1,000 shares of added liquidity during the 
month. Equity Members that qualify for the discounted rates of the 
Remove Volume Tiers in a particular month will be charged the lower fee 
according to the threshold tier achieved instead of the standard Remove 
Volume fee of $0.00295 per share for executions of orders in securities 
priced at or above $1.00 per share in that particular month.
---------------------------------------------------------------------------

    \4\ See 2614(a)(3)(i)(A) for the definition of Midpoint Peg 
Order.
    \5\ See Fee Schedule, Section 1)a) and Liquidity Indicator Codes 
RA, Ra, RB, Rb, RC, Rc, Rp, RR, Rr, RT, and Rt.
    \6\ The term ``Equity Member'' is a Member authorized by the 
Exchange to transact business on MIAX Pearl Equities. See Exchange 
Rule 1901.
    \7\ ``ADV'' means average daily volume calculated as the number 
of shares added or removed, combined, per day. ADV is calculated on 
a monthly basis. See the Definitions Section of the Fee Schedule. 
The Exchange excludes from its calculation of ADV shares added or 
removed on any day that the Exchange's system experiences a 
disruption that lasts for more than 60 minutes during regular 
trading hours, on any day with a scheduled early market close, and 
on the ``Russell Reconstitution Day'' (typically the last Friday in 
June). Routed shares are also not included in the ADV calculation. 
See id.
    \8\ ``TCV'' means total consolidated volume calculated as the 
volume in shares reported by all exchanges and reporting facilities 
to a consolidated transaction reporting plan for the month for which 
the fees apply. The Exchange excludes from its calculation of TCV 
volume on any given day that the Exchange's system experiences a 
disruption that lasts for more than 60 minutes during Regular 
Trading Hours, on any day with a scheduled early market close, and 
on the ``Russell Reconstitution Day'' (typically the last Friday in 
June). See the Definitions Section of the Fee Schedule.
---------------------------------------------------------------------------

    The Exchange proposes to increase the ADV requirement in Remove 
Volume Tier 1 from 0.10% to now be 0.20% of TCV. The Exchange also 
proposes to eliminate Remove Volume Tier 2 from the Fee Schedule. 
Accordingly, with the proposed changes, to achieve the reduced fee of 
Remove Volume Tier 1, Equity Members must achieve an ADV that is equal 
to or greater than 0.20% of TCV and execute at least 1,000 shares of 
added liquidity during the month.
    The purpose of this change is for business and competitive reasons. 
The Exchange notes that despite the modest increase in volume ADV 
requirement and elimination of Remove Volume Tier 2, the Exchange's 
reduced fee and requirements to achieve Remove Volume Tier 1 remain 
competitive with the fees to remove liquidity in securities priced at 
or above $1.00 per share charged by other equity exchanges, including 
other equity exchanges that also have reduced fees for meeting certain 
criteria for removing liquidity.\9\
---------------------------------------------------------------------------

    \9\ See MEMX LLC (``MEMX'') Equities Fee Schedule, available at 
https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/ (providing standard remove volume fee of $0.0030 per 
share and reduced Liquidity Removal Tier fee of $0.00295 per share 
so long as a member achieves an ADV greater than or equal to 0.60% 
of TCV and a Removed Volume ADV greater than or equal to 0.30% of 
TCV); see also Cboe EDGX Equities Fee Schedule, available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/ (providing a 
standard fee of $0.0030 per share to remove liquidity in securities 
priced at or above $1.00 per share, Remove Volume Tier 1 fee of 
$0.0029 per share to remove liquidity in securities priced at or 
above $1.00 per share so long as the member achieves an ADAV greater 
than or equal to 0.25% of TCV).
---------------------------------------------------------------------------

Step-Up Added Liquidity Rebate
    The Exchange currently provides a standard rebate of ($0.0024) \10\ 
per share for executions of orders in securities priced at or above 
$1.00 per share that add displayed liquidity to the Exchange. The 
Exchange also currently offers various volume-based tiers and 
incentives through which an Equity Member may receive an enhanced 
rebate for executions of orders that add displayed liquidity to the 
Exchange by achieving the specified criteria that corresponds to a 
particular tier/incentive.
---------------------------------------------------------------------------

    \10\ Rebates are indicated by parentheses. See the General Notes 
Section of the Fee Schedule.
---------------------------------------------------------------------------

    In particular, the Exchange adopted a volume based pricing 
incentive, referred to as the ``Step-Up Added Liquidity Rebate,'' in 
which qualifying Equity Members receive an enhanced rebate of ($0.0031) 
per share for executions of orders in securities priced at or above 
$1.00 per share that add displayed liquidity to the Exchange.\11\ The 
enhanced rebate provided by the Step-Up Added Liquidity Rebate applies 
to Liquidity Indicator Codes AA (adds liquidity, displayed order, Tape 
A), AB (adds liquidity, displayed order, Tape B) and AC (adds 
liquidity, displayed order, Tape C).\12\
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 95614 (August 26, 
2022), 87 FR 53813 (September 1, 2022) (SR-PEARL-2022-33).
    \12\ See Fee Schedule, Section 1)f), Step-Up Added Liquidity 
Rebate, and Section 1)b), Liquidity Indicator Codes and Associated 
Fees.
---------------------------------------------------------------------------

    Equity Members qualify for the Step-Up Added Liquidity Rebate by 
achieving a ``Step-Up ADAV as a % of TCV'' \13\ of at least 0.03% over 
the baseline month of May 2023. Average daily added volume (``ADAV'') 
means average daily added volume calculated as the number of shares 
added per day.\14\ For example, if an Equity Member had an ADAV as a 
percent of TCV of 0.01% in May 2023, then that Equity Member has to 
achieve an ADAV as a percent of TCV equal to or greater

[[Page 88188]]

than 0.04% in any subsequent month in order to qualify for the Step-Up 
Added Liquidity Rebate. Currently, the Step-Up Added Liquidity Rebate 
will expire no later than November 30, 2023.\15\
---------------------------------------------------------------------------

    \13\ The term ``Step-Up ADAV as a % of TCV'' means ADAV as a 
percent of TCV in the relevant baseline month subtracted from the 
current month's ADAV as a percent of TCV. See the Definitions 
Section of the Fee Schedule. The Exchange notes that the Step-Up 
Added Liquidity Rebate does not apply to executions of orders in 
securities priced below $1.00 per share or executions of orders that 
constitute added non-displayed liquidity.
    \14\ See the Definitions Section of the Fee Schedule. ADAV and 
ADV are calculated on a monthly basis. See id.
    \15\ See Fee Schedule, Section 1)f).
---------------------------------------------------------------------------

    The Exchange now proposes to amend Section 1)f) of the Fee Schedule 
so that the criteria to qualify for the Step-Up Added Liquidity Rebate 
will expire no later than December 31, 2023.\16\ The Exchange will 
issue an alert to market participants should the Exchange determine 
that the Step-Up Added Liquidity Rebate will expire earlier than 
December 31, 2023, or if the Exchange determines to amend the criteria 
or rate applicable to the Step-Up Added Liquidity Rebate prior to the 
end of the sunset period. The Exchange notes that at least one other 
competing equities exchange provides a similar ``sunset period'' for 
one of its enhanced rebates subject to the same baseline month as the 
Exchange proposes.\17\
---------------------------------------------------------------------------

    \16\ The Exchange notes that at the end of the sunset period, 
the Step-Up Added Liquidity Rebate will no longer apply unless the 
Exchange files another 19b-4 Filing with the Commission to amend the 
criteria terms.
    \17\ See MEMX Equities Fee Schedule, Liquidity Provision Tiers 
table and corresponding footnotes ``*'' through ``***'', supra note 
9.
---------------------------------------------------------------------------

    The Exchange does not propose any other changes to the qualifying 
criteria for Equity Members to receive the Step-Up Added Liquidity 
Rebate. The Exchange also does not propose to amend the amount of the 
enhanced rebate of ($0.0031) per share for Equity Members that qualify 
for the Step-Up Added Liquidity Rebate. Finally, the Exchange does not 
propose to change the baseline ADAV of 0.00% of TCV used for firms that 
become Equity Members of the Exchange after May 2023 for the purpose of 
the Step-Up Added Liquidity Rebate calculation.
    This change simply extends the sunset period from November 30, 2023 
until December 31, 2023. The Exchange believes that the Step-Up Added 
Liquidity Rebate will continue to provide an incentive for Equity 
Members to strive for higher ADAV on the Exchange (above their ADAV in 
the baseline month of May 2023) to receive the enhanced rebate for 
qualifying executions of orders in securities priced at or above $1.00 
per share that add displayed liquidity to the Exchange. The Exchange 
believes that with the extension of the sunset period the Step-Up Added 
Liquidity Rebate will continue to encourage the submission of 
additional displayed added liquidity to the Exchange, thereby promoting 
price discovery and contributing to a deeper and more liquid market, 
which benefits all market participants and enhances the attractiveness 
of the Exchange as a trading venue.
    The purpose of this change is for business and competitive reasons. 
Several competing equities exchanges continue to use a baseline month's 
volume for their members as the requirements for higher rebates/lower 
fees that is an older month than the Exchange's baseline month of May 
2023 and many of those exchanges do not have a sunset provision.\18\ By 
extending the sunset period, the Exchange will be able to continue to 
compete with the enhanced rebates offered by competing exchanges that 
use older baseline months' volume in their requirements for the higher 
rebates/lower fees.
---------------------------------------------------------------------------

    \18\ See NYSE Arca Equities Fee Schedule, Section VII, Step Up 
Tiers table, footnote ``(b),'' available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf 
(providing enhanced rebate of $0.0036 per share on all LMM add 
volume if the ETP Holder, together with its affiliates, executes 
Tape B adding ADV that is at least 40% over the ETP Holder's adding 
ADV in Q3 2019, as a percentage of Tape B CADV with no sunset 
provision); Cboe BYX Equities Fee Schedule, Step-Up Tier table, 
available at https://www.cboe.com/us/equities/membership/fee_schedule/byx/ (providing reduced fee if the member has a 
combined Step-Up Auction ADV and Step-Up ADAV from April 2022 
greater than or equal to 3,000,000 and the member has a combined 
Auction ADV and ADAV greater than or equal to 0.25% of TCV with no 
sunset provision).
---------------------------------------------------------------------------

Implementation
    The proposed changes are immediately effective.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \19\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \20\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among its Equity Members and issuers and other 
persons using its facilities and is not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange operates in a highly fragmented and competitive market 
in which market participants can readily direct their order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. More specifically, the 
Exchange is only one of sixteen registered equities exchanges, and 
there are a number of alternative trading systems and other off-
exchange venues, to which market participants may direct their order 
flow. Based on publicly available information, no single registered 
equities exchange had more than approximately 15.58% of the total 
market share of executed volume of equities trading for the month of 
November 2023.\21\ Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow, and the Exchange 
represented approximately 2.08% of the overall equities market share 
for the month of November 2023.\22\ The Commission and the courts have 
repeatedly expressed their preference for competition over regulatory 
intervention in determining prices, products, and services in the 
securities markets. In Regulation NMS, the Commission highlighted the 
importance of market forces in determining prices and SRO revenues and 
also recognized that current regulation of the market system ``has been 
remarkably successful in promoting market competition in its broader 
forms that are most important to investors and listed companies.'' \23\
---------------------------------------------------------------------------

    \21\ See the ``Market Share'' section of the Exchange's website, 
available at https://www.miaxglobal.com/ (last visited December 12, 
2023).
    \22\ See id.
    \23\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37499 (June 29, 2005).
---------------------------------------------------------------------------

    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow or discontinue to reduce use of certain categories of 
products, in response to new or different pricing structures being 
introduced into the market. Accordingly, competitive forces constrain 
the Exchange's transaction fees and rebates, and market participants 
can readily trade on competing venues if they deem pricing levels at 
those other venues to be more favorable. The Exchange believes the 
proposal reflects a reasonable and competitive pricing structure 
designed to continue to incentivize market participants to direct 
additional orders that add liquidity to the Exchange in securities 
priced at or above $1.00 per share, which the Exchange believes would 
deepen liquidity and promote market quality on the Exchange to the 
benefit of all market participants.
    The Exchange notes that volume-based incentives and discounts (such 
as tiers) have been widely adopted by exchanges (including the 
Exchange), and believes they are reasonable, equitable and not unfairly 
discriminatory because they are available to all Equity Members on an 
equal basis, provide additional benefits or discounts that are 
reasonably related

[[Page 88189]]

to the value of an exchange's market quality associated with higher 
levels of market activity (such as higher levels of liquidity provision 
and/or growth patterns), and the introduction of higher volumes of 
orders into the price and volume discovery process.
    The Exchange believes its proposal to increase the ADV requirement 
in Remove Volume Tier 1 and eliminate Remove Volume Tier 2 from the Fee 
Schedule is reasonable, equitably allocated and not unfairly 
discriminatory because the reduced fee for Remove Volume Tier 1 will 
continue to be available to all Equity Members on an equal basis, and 
is reasonably designed to encourage Equity Members to maintain or 
increase their order flow. The Exchange believes that even with this 
proposal, the reduced fee of Remove Volume Tier 1 will continue to 
promote price discovery, enhance liquidity and market quality, and 
contribute to a more robust and well-balanced market ecosystem on the 
Exchange to the benefit of all Equity Members and market participants.
    Further, the Exchange believes its proposal to increase the ADV 
requirement in Remove Volume Tier 1 from 0.10% to now be 0.20% of TCV 
and eliminate Remove Volume Tier 2 is reasonable, equitably allocated 
and not unfairly discriminatory because, despite the modest increase in 
ADV requirement and elimination of Remove Volume Tier 2, the Exchange's 
reduced fee and requirements to achieve Remove Volume Tier 1 remain 
competitive with the fees to remove liquidity in securities priced at 
or above $1.00 per share charged by other equity exchanges, including 
other equity exchanges that also have reduced fees for meeting certain 
criteria for removing liquidity.\24\
---------------------------------------------------------------------------

    \24\ See supra note 9.
---------------------------------------------------------------------------

    The Exchange believes that the Step-Up Added Liquidity Rebate, as 
modified by the proposed change to the sunset period, is reasonable, 
equitable and not unfairly discriminatory as the Step-Up Added 
Liquidity Rebate will continue to be available to all Equity Members on 
an equal basis, and is reasonably designed to encourage Equity Members 
to maintain or increase their order flow in liquidity-adding volume. 
The Exchange believes this will continue to promote price discovery, 
enhance liquidity and market quality, and contribute to a more robust 
and well-balanced market ecosystem on the Exchange to the benefit of 
all Equity Members and market participants.
    In addition, the Exchange believes its proposal is reasonable 
because several competing equities exchanges continue to use a baseline 
month's volume for their members as the requirement for higher rebates/
lower fees that is an older month than the Exchange's baseline month of 
May 2023 and many of those exchanges do not have a sunset 
provision.\25\ By extending the sunset period, the Exchange will be 
able to continue to compete with the enhanced rebates offered by 
competing exchanges that use older baseline months' volume in their 
requirements for the higher rebates/lower fees.
---------------------------------------------------------------------------

    \25\ See supra note 18.
---------------------------------------------------------------------------

    The Exchange believes it is reasonable, equitable and not unfairly 
discriminatory to amend the sunset period in the Fee Schedule for the 
Step-Up Added Liquidity Rebate because it will provide clarity to 
Equity Members that, unless the Exchange determines to amend or 
otherwise modify the Step-Up Added Liquidity Rebate, the Step-Up Added 
Liquidity Rebate will expire at the end of the sunset period. This will 
allow Equity Members to take into account that the enhanced rebate 
provided for by the Step-Up Added Liquidity Rebate may be discontinued 
at the end of sunset period unless the Exchange announces otherwise and 
files a revised proposal with the Commission. The Exchange further 
notes that it will issue an alert to market participants should the 
Exchange determine that the Step-Up Added Liquidity Rebate will expire 
earlier than December 31, 2023, or if the Exchange determines to amend 
the criteria or rate applicable to the Step-Up Added Liquidity Rebate 
prior to the end of the sunset period.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed change will not impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.
Intramarket Competition
    The Exchange believes that its proposal will not impose any burden 
on intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes the Step-
Up Added Liquidity Rebate, as modified by this proposal, will continue 
to incentivize Equity Members to submit additional orders that add 
liquidity to the Exchange, thereby contributing to a deeper and more 
liquid market and promoting price discovery and market quality on the 
Exchange to the benefit of all market participants and enhancing the 
attractiveness of the Exchange as a trading venue, which the Exchange 
believes, in turn, would continue to encourage market participants to 
direct additional order flow to the Exchange. Greater liquidity 
benefits all Equity Members by providing more trading opportunities and 
encourages Equity Members to send additional orders to the Exchange, 
thereby contributing to robust levels of liquidity, which benefits all 
market participants. As described above, the Exchange believes its 
proposal to increase the ADV requirement in Remove Volume Tier 1 from 
0.10% to now be 0.20% of TCV and eliminate Remove Volume Tier 2 allows 
the Exchange's reduced Removed Volume fee to remain competitive with 
the fees to remove liquidity in securities priced at or above $1.00 per 
share charged by other equity exchanges, including other equity 
exchanges that also have reduced fees for meeting certain criteria for 
removing liquidity.\26\ Similarly, the opportunity to qualify for the 
proposed new Step-Up Added Liquidity Rebate, and thus receive the 
proposed rebate for qualifying executions of orders in securities 
priced at or above $1.00 per share that add displayed volume will 
continue to be available to all Equity Members that meet the associated 
volume requirement, and the Exchange believes the proposed extension of 
the sunset period is reasonably related to the enhanced market quality 
that the Step-Up Added Liquidity Rebate is designed to promote. 
Accordingly, the Exchange does not believe the proposed changes would 
impose any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purpose of the Act.
---------------------------------------------------------------------------

    \26\ See supra note 9.
---------------------------------------------------------------------------

    The Exchange believes its proposal to extend the sunset period in 
the Fee Schedule for the Step-Up Added Liquidity Rebate will not impose 
any burden on intramarket competition not necessary or appropriate in 
furtherance of the purposes of the Act because it will provide clarity 
to Equity Members that, unless the Exchange determines to amend or 
otherwise modify the Step-Up Added Liquidity Rebate, the Step-Up Added 
Liquidity Rebate will be discontinued at the end of the sunset period. 
This will allow Equity Members to take into account that the enhanced 
rebate provided for by the Step-Up Added Liquidity Rebate may be 
discontinued at the end of the sunset period unless the Exchange 
announces otherwise. The Exchange further notes that it will issue an 
alert to market participants should the Exchange determine that the 
Step-Up Added

[[Page 88190]]

Liquidity Rebate will expire earlier than December 31, 2023, or if the 
Exchange determines to amend the criteria or rate applicable to the 
Step-Up Added Liquidity Rebate prior to the end of the sunset period.
Intermarket Competition
    The Exchange believes its proposal will benefit competition, and 
the Exchange notes that it operates in a highly competitive market. 
Equity Members have numerous alternative venues they may participate on 
and direct their order flow to, including fifteen other equities 
exchanges and numerous alternative trading systems and other off-
exchange venues. As noted above, based on publicly available 
information, no single registered equities exchange had more than 
approximately 15.58% of the total market share of executed volume of 
equities trading for the month of November 2023.\27\ Thus, in such a 
low-concentrated and highly competitive market, no single equities 
exchange possesses significant pricing power in the execution of order 
flow, and the Exchange represented approximately 2.08% of the overall 
market for the month of November 2023.\28\ Moreover, the Exchange 
believes that the ever-shifting market share among the exchanges from 
month to month demonstrates that market participants can shift order 
flow in response to new or different pricing structures being 
introduced to the market. Accordingly, competitive forces constrain the 
Exchange's transaction fees and rebates generally, including with 
respect to the criteria for Equity Members to achieve Remove Volume 
Tier 1 and the Step-Up Added Liquidity Rebate, and market participants 
can readily choose to send their orders to other exchanges and off-
exchange venues if they deem rebate criteria at those other venues to 
be more favorable.
---------------------------------------------------------------------------

    \27\ See supra note 21.
    \28\ See id.
---------------------------------------------------------------------------

    As described above, the proposed changes represent a competitive 
proposal through which the Exchange is seeking to continue to encourage 
additional order flow to the Exchange through a volume-based incentive 
that is comparable to the criteria for volume-based incentives adopted 
by at least one other competing exchange that has a similar sunset 
period for a specific enhanced rebate that adds liquidity to that 
market.\29\ Accordingly, the Exchange believes that its proposal would 
not burden, but rather promote, intermarket competition by enabling it 
to better compete with other exchanges that offer similar pricing 
incentives to market participants that achieve certain volume criteria 
and thresholds.
---------------------------------------------------------------------------

    \29\ See supra note 17.
---------------------------------------------------------------------------

    Additionally, the Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \30\ The fact 
that this market is competitive has also long been recognized by the 
courts. In NetCoalition v. Securities and Exchange Commission, the D.C. 
circuit stated: ``[n]o one disputes that competition for order flow is 
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market 
system, buyers and sellers of securities, and the broker-dealers that 
act as their routing agents, have a wide range of choices of where to 
route orders for execution'; [and] `no exchange can afford to take its 
market share percentages for granted' because `no exchange possesses a 
monopoly, regulatory or otherwise, in the execution of order flow from 
broker dealers' . . .''.\31\ Accordingly, the Exchange does not believe 
its proposed pricing changes impose any burden on competition that is 
not necessary or appropriate in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \30\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \31\ See NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSE-2006-21)).
---------------------------------------------------------------------------

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\32\ and Rule 19b-4(f)(2) \33\ thereunder. 
At any time within 60 days of the filing of the proposed rule change, 
the Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \33\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#ef9d9a838ac28c8082828a819b9caf9c8a8cc1888099"><span class="__cf_email__" data-cfemail="3d4f485158105e5250505853494e7d4e585e135a524b">[email protected]</span></a>. Please include 
file number SR-PEARL-2023-69 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-PEARL-2023-69. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All

[[Page 88191]]

submissions should refer to file number SR-PEARL-2023-69 and should be 
submitted on or before January 10, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\34\
---------------------------------------------------------------------------

    \34\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27917 Filed 12-19-23; 8:45 am]
BILLING CODE 8011-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>